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© 2016 eMarketer Inc. Made possible by Immersive Media: A New Frontier Powered by Virtual and Augmented Reality Bryan Yeager Senior Analyst July 14, 2016

eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

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Page 1: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Made possible by

Immersive Media:

A New Frontier Powered by Virtual

and Augmented Reality

Bryan Yeager

Senior Analyst

July 14, 2016

Page 2: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Defining Immersive Media

Page 3: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Virtual Reality (VR) vs. Augmented Reality (AR)

Image credit: Nan Palmero, Flickr

VR: completely immerses a user inside

a virtual world or experience

Image credit: Ikea, YouTube

AR: overlays virtual objects, other digital

information over the real world

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© 2016 eMarketer Inc.

What about Mixed Reality (MR)?

MR: real-time commingling of virtual and physical objects.

Sometimes used interchangeably with AR

Image credit: Microsoft Sweden, Flickr Image credit: Magic Leap, YouTube

Page 5: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Immersive media not covered in today’s webinar:

Facebook Canvas Ads Snapchat Snap Ads

Image Credit: Facebook Image Credit: Snapchat

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© 2016 eMarketer Inc.

Consumer-level VR and AR hardware landscape

Mobile VR Desktop VR AR/MR Devices

Samsung Gear VR Google Cardboard

Google Daydream

(Fall 2016)

Oculus Rift HTC Vive

Sony PlayStation VR

(Fall 2016)

Microsoft HoloLens

(Dev kit available)

Magic Leap

(Details thin)

Google Tango

(Lenovo Phab 2 Pro,

Fall 2016)

Common

Smartphones &

TabletsImage credits: Respective companies

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© 2016 eMarketer Inc.

Analyzing the Hype Around

Immersive Media

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© 2016 eMarketer Inc.

VR and AR tech have been around for decades

Image credits: Minecraftpsyco/Wikipedia, VRS.org.uk, National Center for Supercomputing Applications

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© 2016 eMarketer Inc.

Large tech firms making big bets on VR and AR

Acquired Oculus in March 2014 for $2B

Added 360-degree video support in Nov. 2015

Launched Oculus Rift in March 2016 for $599

AR glasses part of 10-year roadmap

Low-cost Cardboard has brought VR to millions

YouTube 360-degree video support added March 2015

Launching Daydream mobile VR platform in Fall 2016

Major investments in MR startup Magic Leap

Acquired several AR companies in past two years

Continues to file numerous AR and VR patents

Hired Doug Bowman, 3-D/VR interface expert

No Apple-branded VR or AR products … yet

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© 2016 eMarketer Inc.

More than $2.5 billion invested in VR, AR

companies across more than 200 deals

$76 $17

$56

$626

$117 $131 $165

$238

$1,077

15

8

14 13

25

16

33

4442

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

Amount invested (millions)

Number of deals

Source: CB Insights, June 2016

Magic Leap

Funding Rounds

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© 2016 eMarketer Inc.

Tech has finally improved enough to enable

mainstream consumer applications

Faster computer

and graphics

processing

Powerful

smartphones with

array of sensors

More vibrant and

detailed mobile

displays

+

Improved optics

for capture and

viewing

Easier to use and

more accessible

creative tools

VR: Presence AR: Seamlessness

Image credits: Creative Stall, Hysen Drogu, Jennifer Cozzette, The Noun Project

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© 2016 eMarketer Inc.

Confidence that immersive technologies and

media are here to stay

“For the first time in my professional career, I feel

pretty confident that this is not a hype cycle that

we’re in. This is the beginning of an evolution in

the VR space that will continue. There may be

some booms and busts in that evolution, but it is

not something that’s going to fizzle and

fade away only to reemerge five or six years

later. The train has left the station.”

—Adrian Slobin, Global Innovation Lead, SapientNitro

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© 2016 eMarketer Inc.

The Audience for Immersive

Media Experiences

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© 2016 eMarketer Inc.

VR and AR estimates are all over the map,

underscoring the nascent state of the market

By 2020, the

worldwide VR

market will reach:

$10BSource: UBS, Dec. 2015

$30BSource: Digi-Capital, Jan. 2016

$70BSource: TrendForce, Dec. 2015

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© 2016 eMarketer Inc.

Mobile VR users expected to outpace desktop

VR users worldwide

18

53

81

110

135

4.5

8.5

12.3

16.2

19.5

2016 2017 2018 2019 2020

Mobile VR Users

Desktop VR Users

Source: Deutsche Bank, March 2016

“We think the VR ecosystem

is in its ‘2007 smartphone’

moment in terms of the

adoption cycle. It took 4 to

5 years for smartphones to

reach 100 million users in the

US; we expect a slower

adoption curve for VR, but

still strong enough for

an enormous market.”

—Deutsche Bank

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© 2016 eMarketer Inc.

As more VR

devices have

come to market,

appetite for

paying the high

prices typical of

desktop systems

has decreased

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© 2016 eMarketer Inc.

AR market could be even bigger than VR, but the

few estimates that exist are disparate

Venture capital firm Digi-Capital states that worldwide AR

revenues will reach $90 billion by 2020. (January 2016)

CCS Insight expects total worldwide market value for AR

smart glasses will reach $1.2 billion by 2017. (June 2015)

Tractica anticipates worldwide shipments of smart glasses

will reach 5.4 million units per year by 2020. (May 2015)

ABI Research forecasts 21 million smart glasses units to ship

worldwide by 2020. (November 2015)

IDC expects worldwide AR hardware shipments to exceed

45 million by 2020. (April 2016)

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© 2016 eMarketer Inc.

VR and AR still in the experimental phase for

many companies

25%Marketing executives worldwide that

believe VR and AR will have the

biggest impact on marketing companies

by 2020. (Mobile ranked as top impact,

cited by 59% of respondents.)

(Source: Economist Intelligence Unit/Marketo, Feb. 2016)

Primary tech and content being

developed for VR and AR by

companies worldwide:

1. Education and gaming (20.0%)

2. AR tools for mobile (14.3%)

3. 3-D simulation, imaging,

recognition (11.6%)

(Source: Knight Foundation, Oct. 2015)

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© 2016 eMarketer Inc.

Leveraging Immersive Media for

Marketing and Advertising

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© 2016 eMarketer Inc.

Two broad types of VR content:

Spherical Capture (“360-degree”) Rendered Environments

Image Credit: The North Face, Daily Mail Image Credit: Sixense, YouTube

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© 2016 eMarketer Inc.

Costs for immersive content vary, with

in-demand specialists pushing up prices

“Costs are all over

the map. We’re seeing

projects that range from

$10,000 in the low end

to up into the hundreds

of thousands, and

potentially more, on the

higher end.”

—Ben Nunez, CEO, Littlstar

“You have the same titles as you do in

the film industry, but everyone has

to be a specialist in VR. That

carries a higher cost than traditional

filmmaking, because you’re having to

get these people who are in

extremely high demand at the

moment.”

—Henry Stuart, Co-Founder and CEO,

Visualise

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© 2016 eMarketer Inc.

Immersion vs. complexity, cost with VR content

Complexity and Cost

Le

ve

l o

f Im

me

rsio

n

Rotational

Tracking

Rotational

and

Positional

Tracking

Roomscale

Experiences

Haptic

Feedback

Page 23: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Majority of US

internet users

still in curiosity

phase related

to VR

experiences

Opportunity

for brands:

feed that

curiosity

Page 24: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Live events or in-store placements

Image Credits: Framestore, YouTube Image Credits: Beam Suntory, Abigail Kelly, Fortune.com

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© 2016 eMarketer Inc.

Defining goals and measuring success with

immersive digital marketing experiences

“From a quantitative perspective, we had goals for

how many consumers we wanted to touch, how

many events we were going to execute and how

many samples we were going to pass out. From a

qualitative perspective, we wanted our consumers

to walk away not only talking about the experience,

but also talking about the brand, so we tracked

the social conversation, including

comments and photos from events.”

—Rachel Harris, Director, National Brand Activation, Beam

Suntory

Page 26: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Major VR content platforms:

Organic/Original VR Video Paid VR Ads

Video and Interactive VR

Page 27: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Internet video

providers a

natural fit for

accessing VR

content …

But social

networks not a

top pick (yet)

Page 28: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

VR experience coupled with branded headsets

Image Credits: AKQA, The Drum

Image Credits: DODOcase, Vimeo

Page 29: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

How The North Face approached distribution for

its initial foray into VR content:

“We had a distribution setup with Outside Magazine in

November 2015, which I think is a good example

of us investing in distribution of that

content. Some 75,000 subscribers of Outside

Magazine received a branded Google Cardboard

viewer polybagged into their delivery and were

encouraged to download the app to check out the

experience, and then learn more about the story at

the magazine online.”

—Eric Oliver, Director, Digital Marketing, The North Face

Page 30: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

A new medium with new rules that are still being

written

“The biggest challenge of creating virtual

reality content is it undoes all the rules

that have been created for

traditional filmmaking … the passage of

time, the way you cut and even the lack of

having different ways that you tell an actual

story with close-ups or mid shots—you don’t

have that in VR because it’s a full

capture of the world.”

—Gevorg Karensky, Founder, Bipolar ID

Page 31: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Pondering marketing within virtual environments

where people spend hours, not minutes

“As we talk to our clients, the big thing

they’re thinking about is how to move

beyond the ‘big splash’ event and

actually create content that

would drive a consumer back to

the virtual world they’ve built.”

—Adrian Slobin, Global Innovation Lead,

SapientNitro

Page 32: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

In-world placement of virtual ads, products

Image Credits: MediaSpike, TechCrunch

Image Credit: KZero

Page 33: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

What about VR commerce?

One-third of US internet users said they would be

more likely to shop at a retailer if it offered a VR

experience. (Walker Sands, Feb. 2016)

Clothing and apparel, consumer electronics, home

decor and furniture were top categories that excite

US internet users for VR shopping. (SUMO Heavy, April 2016)

Seeing items in real size and form while shopping

online was the top VR activity smartphone users

worldwide were interested in using. (Ericsson ConsumerLab, Oct. 2015)

Page 34: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Barriers to virtually replicating some categories

of physical goods, especially in fashion

“When you pick up a matching jacket or

you want to buy some other type of

fabric-type material [in a virtual

environment], it’s extremely

challenging to make it look real.

It’s demanding to make a 3-D model of

these soft goods that can run on mobile

devices or even on PCs in real time,

especially when it’s moving.”

—Amir Rubin, Co-Founder and CEO, Sixense

Page 35: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

VR experiences are mostly

top-funnel …

AR experiences are mostly

middle- and bottom-funnel

Page 36: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Two broad types of AR content:

Marker Activated Context Aware

Image Credits: ARGroup, YouTube Image Credits: Microsoft, Sweet Rose Studios

Page 37: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Markers and Cues

Elements that enable AR experiences:

Content Overlays

Calls to Action

Distribution

Integrate with existing

mobile app or create new

standalone app

Access via consumer apps

offered by AR companies:

Codes Graphics

Faces Surfaces

Locations and Other Signals

3-D Models Video/Audio

Interfaces Social Shares

Directions IncentivesImage Credit: Mara Julieta G/Noun Project

Page 38: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Bringing engaging digital content and analytics

to physical media

Magazine Ads Direct Mail

PackagingCatalogs

Bills and Statements

Signage

Merchandise

BrochuresCirculars

Image Credits: Marxent,

YouTube

Image Credits: Aurasma, YouTube

Books

Page 39: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Hyundai Virtual Guide utilizes AR to assist car

owners with a variety of functions

Announced at 2015 LA

Auto Show and

launched in Jan. 2016

Built based on customer

insight about need to

better educate owners

about car features

Measure of success:

improved customer

satisfaction scores

Image Credit: Hyundai Motor America

Page 40: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Advice for supporting an AR project:

“You have to understand all of the use cases

up front. There are always going to be a few

unplanned implementation roadblocks, and

you have to stop and re-evaluate exactly how

the app is going to work in a real-world use

case. Allow yourself enough time to

test the app in real-world situations.”

—Miles Johnson, Connected Care Communications

Manager, Hyundai Motor America

Page 41: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Sephora Virtual Artist uses AR to enable mobile

‘try-before-you-buy’ lipstick experience

Launched in February 2016

Integrated with its Sephora

to Go app and powered by

ModiFace

Feature generated

1.6 million visits and

45 million “try-ons” in

8 weeks after its launch

Powerful tool to improve

mobile conversion

Image Credits:

Sephora,

Yahoo Finance,

Multivu

Page 42: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Lowes experiments with Google’s Project Tango

tech for greater AR precision

Device uses special

depth motion sensors

to capture more data

for info, object display

Helps ensure before

purchasing that large

items like fridges and

stoves will fit in

designated space

Image Credits: VentureBeat, Sydney Morning Herald

Page 43: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Snapchat sponsored lenses mix facial

recognition with AR for engaging experiences

Image Credit: SosyalMedya.co Image Credit: Adweek

Page 44: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Pokémon GO mobile AR game is breakout

success shortly after early July 2016 launch

Gamers can catch

Pokémon in real-world

scenarios

Rapid adoption among

iOS, Android users

Average use: >43

minutes per day—

almost double that of

average time spent

with Snapchat

Image Credit: Polygon

Page 45: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

Key Takeaways:

It seems that 2016 is the year VR and AR enter the mainstream

conscience of consumers, but we’re still at least a few years

from widespread immersive tech adoption.

Smart mobile devices will be key enablers for early widespread

adoption of VR and AR, with the potential for longer-term take

up of smart glasses and head-mounted displays.

Though not always the case, VR marketing experiences tend to

be used to drive awareness, while AR marketing experiences

are utilized for conversion and engagement.

With either format, experimenting, measuring and iterating will

be critical to delivering truly engaging and valuable

experiences to target audiences.

Page 46: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

Aurasma is changing the way we interact with the world.

We help marketers and organizations use augmented reality to unite the physical and digital in a new world of immersive experiences that drive engagement, innovation, and conversions

Page 47: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

The Next Marketing Channel AR blends traditional and digital channels

Traditional ChannelsPrint, packaging, direct

mail, tradeshows

Static

Not measurable

Digital ChannelsDisplay Ads, Mobile Ads, Email, Social Campaigns,

Mobile Apps

Crowded landscape

Augmented Reality

A new, immersive marketing channel that

leverages benefits of print, digital, and mobile.

Tangible experience

Targeted

Measurable

Interactive

Mobile

High touch

Page 48: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

How to Use ARStart with traditional channels and add digital content

=MeasurabilityTargetingInteractivityEngagement

Traditional Marketing Channels

DIRECT MAILCATALOG

PRINT ADVERTISING

Augmented Reality

+

COUPONSTAP TO PURCHASEVIRTUAL TRY-ON

Page 49: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Bridging the physical and digital Enhance traditional marketing channels with digital and mobile

Direct Mail Catalogs Statements Products Advertisements

Merchandise Events Packaging In-Store Signage Business Cards

Consumers unlock augmented reality experiences with their mobile devices, bringing printed materials and product packaging to life.

Page 50: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Bridging the physical and digital

A new channel to enhance traditional marketing and communication channels with digital and mobile

Tap to PurchaseIncrease Sales

Virtual Try OnIncrease Revenue

Schedule MeetingHigher Conversions

On-Line HelpReduce Call Center

Set-Up & SupportCustomer Sat

Surveys & SocialEngagement

Contest & GamesEngagement

ContactBrand Awareness

Increase RevenueGrow SalesHigher Conversions

Mobile CouponIncrease Sales

Exclusive ContentIncrease Value

Lower CostImprove Customer SatisfactionBetter EngagementGrow Brand Awareness

Page 51: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Aurasma CloudCreate, Manage, Track

Augmented reality experiences

Brand content

Videos

GraphicsPhotographs

Audio

3D models

HP AurasmaCreate AR and share with everyone

Aurasma App

Your App + SDK

Skinned App

Social

CollateralAds

Direct MailCatalogues

AudienceCampaign Inputs

Print

Marketer

Page 52: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

200,000 HP Aurasma Customers Worldwide

Page 53: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.

Thank YouWendy Tai

Product Marketing Manager, Aurasma

@Aurasma

Page 54: eMarketer Webinar: Immersive Media—A New Frontier Powered by Virtual and Augmented Reality

© 2016 eMarketer Inc.

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